http://biz.yahoo.com/rf/991122/h4.html

Monday November 22, 7:38 am Eastern Time

FOCUS-Iraq halts crude exports as rejects U.N. move

(Updates with Iraq Oil Minister confirmation, pvs LONDON)

By Hassan Hafidh

BAGHDAD, Nov 22 (Reuters) - Iraq said it was stopping oil exports on Monday after rejecting a two-week extension of a U.N. programme allowing the sanctions-bound country to sell its main resource in return for food.

Iraqi Oil Minister Amir Muhammed Rasheed confirmed Baghdad had ended sales under the sixth phase of the programme, saying he would ``wait and see'' on the matter of any resumption.

``We have finished pumping and loading all the tankers which we have contracted for under phase six of the oil deal by today,'' he told reporters.

``We have fulfilled all our obligations under the sixth phase.''

The decision, earlier disclosed to Reuters in London by an official of Iraq's SOMO state oil marketing organisation, helped push oil prices to fresh post-Gulf War highs on Monday.

Brent crude futures hit a peak of $25.90 a barrel before retreating to $25.74, their highest levels since the 1991 conflict that ended Iraq's seven-month occupation of Kuwait.

Iraq has recently been exporting about 2.2 million barrels per day, equivalent to about five percent of internationally traded oil.

The SOMO official said earlier the oil industry had no plans for a resumption until it got a go-ahead from Iraq's government.

``This is what our government has said. We will not export for the next two weeks,'' he said.

IRAQ SEES HAND OF U.S.

Baghdad on Saturday said the U.S. had orchestrated a U.N. decision for a two-week extension of the programme to put pressure on other Security Council members to accept a comprehensive draft resolution on Iraq.

The programme allows Baghdad to sell $8.3 billion worth of crude oil over six months to buy food and medicine for Iraqi people hit by U.N. trade sanctions.

The last six-month phase of the oil-for-food deal expired at midnight on Saturday.

The SOMO official said Iraq had stopped exports from the Turkish Mediterranean port of Ceyhan and was loading its last two cargoes from the Gulf terminal of Mina al-Bakr.

Iraq has been exporting roughly 950,000 bpd of Kirkuk from Ceyhan and 1.25 million bpd of Basrah Blend loading from Mina al-Bakr.

Two vessels of Basrah Blend are currently loading at Mina al Bakr and are expected to finish on Tuesday, the official said.

Iraqi leaders have also rejected a U.N. Security Council's draft proposal to ease sanctions imposed on Iraq after its invasion of Kuwait in 1990.

The U.N. Security Council is currently divided over a draft resolution, initially proposed by Britain and the Netherlands, that would ease the sanctions in return for Iraq's acceptance of a new inspection regime to control its weapons production.

Baghdad wants the United Nations to lift the sanctions entirely without any conditions.

The draft proposes to lift a ceiling on how much oil Iraq can sell, as soon as a new arms inspection commission is set up. It would suspend sanctions on exports and imports after Iraq answers key questions on its weapons of mass destruction.

The U.N. Special Commission (UNSCOM) in charge of Iraq's disarmament under the terms of the 1991 Gulf War ceasefire has not been allowed into Iraq since December 1998 when the U.S. and Britain launched extensive air and missile raids against Iraq.

-- Helium (Heliumavid@yahoo.com), November 22, 1999

Answers

The decision... helped push oil prices to fresh post-Gulf War highs on Monday.

Iraq has recently been exporting... about five percent of internationally traded oil.

Humm.

Price hikes... before the turn.

How much oil needs to be disrupted before the world is held hostage?

*Sigh*

Either that... or re-focuses heavily on renewable energy sources.

Y2K... Lessons to Learn.

Diane

-- Diane J. Squire (sacredspaces@yahoo.com), November 22, 1999.

Renewable energy is the way to go, but no way can we even make a viable effort at this point. I have been promising myself to get a bike, better do it today.

Thanks for all your posts, Diane. You and the other sysops deserve some sort of medal for dealing with all the stuff that bubbles up on this forum.

-- Nancy (wellsnl@hotmail.com), November 22, 1999.

Here's another perspective.

Is Iraq in the process of supplementing what may already be large oil and product reserves? Would this be an excellent strategy for a country bound and determined to not only take Kuwait but also Saudi Arabia?

SO many questions, so little time until they're answered.

Mike

"There's something wrong in L.A." Y2k, The Movie

==================================================================

-- Michael Taylor (mtdesign3@aol.com), November 22, 1999.

saddam is an idiot...but he is not stupid! He pulling on some short hairs. See how fast we smart Americans cowtow to the oil cartel now.

Taz

-- Taz (Tassie123@aol.com), November 22, 1999.

Ties in rather nicely with the news reports on Iraq's y2k unreadiness (See Gulf Oil giants thread below this one). Saddam knows he's got problems, so he's making his next bundle off the market rather than in the market. Works for me.

-- Cash (cash@andcarry.com), November 22, 1999.

Mike,

Iraq can't store crude or products without the threat of US airstrikes taking these stocks out 'in a flash'.

Oil market related question:

As soon as the stock market starts heading south, either the Saudis are gonna announce their bumping up production and/or US Congress will start jawboning about a strategic reserve sale.

But...Congress is out already for the T-Day holiday. Do they come back in Dec or are they out for the year? What are the prospects of some type of SPR sale moving forward in this holiday timeframe????

-- Downstreamer (downstream@bigfoot.com), November 22, 1999.

"Iraq can't store crude or products without the threat of US airstrikes taking these stocks out 'in a flash'." Downstreamer, it seems unrealistic to me that we would take out an oil supply when we are facing the possibility of a major oil shortage early next year. Wouldn't be a very popular move with the public if that shortage develops.

3pm, and this news still isn't reflect in Wall Street.

-- (brooksbie@hotmail.com), November 22, 1999.

Brooksbie, The context of the question was an inquiry on Iraq building stocks for another invasion into Kuwait or Saudi Arabia. I'm saying any such stockbuilding program would be futile. After a decade of monitoring, we know where every well, every refinery and every stoage tank is in Iraq. We've bombed Iraqi refineries and tankage before when they booted out the arms inspectors. If things heated up, we'd do it again.

Futher, the only way Iraqi oil can get onto world markets to alleviate any pending shortages is through the UN oil for food program (I'm overlooking covert minor volumes that go by barge to Iran and trucks to Turkey). Iraq is saying they don't want to play this UN oil for food game any more.

What's out response gonna be?

-- Downstreamer (downstream@bigfoot.com), November 22, 1999.